NEW YORK, May 5 (Reuters) - U.S. cotton futures finished
near a three-month low Thursday on investor sales as a
commodity-wide sell-off undermined a wide variety of markets
and the weak tone could last into next week, analysts said.
The Reuters-Jefferies CRB index, a global benchmark
for commodities, was headed for its biggest loss in two years
due to widespread liquidation.
The mauling suffered by commodities spilled into stocks and
crude, with oil prices stumbling 6 percent as doubts over the
health of global economies spread like a contagion.
'It's an outside market beatdown,' said Jobe Moss, an
analyst for brokers and merchants MCM Inc in Lubbock, Texas.
'This is the undertow of all these outside markets pushing
cotton down a rathole.'
The key July cotton contract on ICE Futures U.S.
fell 4.65 cents to settle at $1.4686 per lb, trading from
$1.4451 to $1.515. It was the lowest close for cotton in almost
three months, Thomson Reuters data showed.
The new-crop December cotton futures lost 3.51 cents
to close at $1.2208 cents per lb.
Volume traded stood at almost 20,000 lots, about a fifth
below the 30-day norm, Thomson Reuters preliminary data
showed.
Moss and other analysts said cotton prices, which rallied
to an all-time peak in March 2011, has been weakened by demand
destruction as consumers turned away from the fiber.
'You're saddled with the problem of no business (being
done),' said Moss.
His view seems borne out by the weekly export sales report
of the U.S. Agriculture Department, which showed U.S. cotton
sales at 74,600 running bales (RBs, 500-lbs each). Two months
ago, weekly U.S. cotton sales topped 500,000 RBs.
Traders said investors have also soured on cotton, as the
level of investor exposure in the market sank.
Open interest in the cotton market dropped to 149,712 lots
as of Wednesday, May 4, from 149,384 lots in the previous
session, the lowest level since October 2009, data from ICE
Futures U.S. showed.
Volume traded in the cotton market was at 10,679 lots as of
May 4, versus the previous tally of 14,166 lots, exchange data
reported.
